How to challenge a surveyors estimate

[mumjimmer]

Hi all, we have had our house valued by agent at 140k before Christmas. No interest over Christmas understandably, in mid Jan our agent suggested lowering the asking price to 135k, we did, as we had found a house we were interested in and didn't want to lose it.
Within a fortnight a couple made an offer of 130k, they had looked at many houses before and considered ours a good deal... we accepted the offer.
We have since had our offer accepted on the house we are interested in.
The buyers (first time) had a surveyor come to look at our house. They have valued it at 115k! We are not in position to reduce any further. Our prospective buyers were very upset.
We feel cheated by our agent, who have either over estimated the house or by the surveyors who have been unreasonable with their estimation. We felt 130 was a fair price considering the transformation since we bought it. The agents do not appear to be fighting our corner. Their response was to hope that the house we were going to buy might reduce by 15k... This is not going to happen, they already reduced by 17.5k and I suspect the surveyor will not be quite as tight as we are offering a 60% payment on a 262k house.
We purchased at 110k 8 years ago. The house was valued for a remortgage at 127'500 in 2007. I heard on the radio today that house values are 5% higher than in 2008 so we can't be far wrong.
The house is a semi ex council property. I have read on here that some surveyors may have a problem with ex council.
The system seems pointless,... If an agent values a property and a buyer offers a price, surely this amount is the true market value. A surveyor will always mark a property price down it seems for its own interest. Why bother with an agents valuation when a surveyor can just make a mockery of it?
Our only option now seems to pull out of selling to first time buyers and hope for a buyer with more collateral so not to scare off lenders.
Our ongoing problem now it would seem is that this valuation report stands and it will put off other prospective buyers paying any more.

We have not seen the surveyors report as yet.
Any advice would be appreciated.
I am not going to add our blood types as this might appear to be too much information.

Also, I spoke to our mortgage lender today, an advisor stated that our house is currently valued at 111k on the 'Halifax price guide'. I wonder if surveyors are referring to this rather than to a houses own merits. I imagine that this guide is set by postcode averages.

surveyors are by nature conservative. This happened to us both when we bought our flat and when we sold it. Get the buyers to change mortgage lender and /or get another surveyor company to do another survey. it may just throw up a different answer. our flat was valued by 1st surveryor at 70k less than we offered. 2nd surveyor at the price we offered. Same on when we sold it. Buyers intial survey came came in 100k less than they offered. Next one was spot on. get the buyer to do another survey (with diff company). You never know what they will come up with. Otherwise put the house back on the market (at same price). Another buyer may come along and offer the same and the valuation may come in ok. you never know,

Surveyors are driven by mortgage company requirements and yes, they are generally conservative.

We did considerable research on what ours would probably sell for via sold house prices and local comparators. Got three agents around to value for sale purposes - these ranged from 325, 350 and 420. We went with the middle (who also offered us lowest % transaction cost), who advised us our sale price would probably get knocked down on survey as our street is considerably cheaper than those either side (for reasons long since lost in the mists of time, and why we bought here in the first place). We had an offer at 350 which fell through, accepted an offer at 348 and were happy to settle for 330 following the surveyor visit (and were surprised that he would go with this valuation tbh).

The surveyor spent 2 hours at our house and spent quite a bit of time talking to us; he also spoke to other local agents who all said he shouldn't value it at more than 280. He would be risking his own job to value it for more. We knew this when accepting offers from people with mortgages and were happy to do so.

It's an art rather than a science and I think you are a bit thin skinned to feel cheated by your agent. They advertise the property for you (and charge you handsomely for it) but are there to get a sale, not to really tell you how much your house is worth - you'd get a RICS qualified surveyor to give you this information, not an idiot with a mobile phone, shiny suit and a rightmove account. Agents are good for getting people through the door but they are not professionals and don't preclude you doing your own assessment of your likely circumstances. FYI, we budgeted for our own purchase on a sale value of £300 on ours to make sure we wouldn't be put in this position.

Sorry, I just re-read my reply and it doesn't sound very sympathetic - I understand this is a very difficult position and what we are doing (selling and buying in areas of London in a property bubble where prices have increased by £100k in a year) is unusual, so informs our position.

The other thing to bear in mind is that the valuation survey that was completed on your place was done with the risk to the mortgage provider and the potential that they will have to resell your property at auction should your buyers default on their mortgage, so it will always be low. The only way to get around this is to sell to people with a big deposit or cash only, where the true market value will be whatever the buyer wants to pay. As the other poster pointed out, different mortgage companies will have different assessments of risk - our sale price is a good 50k above the Zoopla estimate still, which is why we'd not put any faith in the agent's valuation.

The suggestion of going back to the market is probably your best bet, but you might be better only considering offers from people with more than a 20% deposit just in case, so they have more wriggle room to negotiate with you if this situation occurs again.

Thank you for your responses, they confirm some of our thoughts, it is helpful to hear it from the general public who have lived similar experiences.
There are maybe a few other options I have considered overnight... to suggest that the buyer could 'take a loan on top of their mortgage if seriously interested'. It's not going to be a popular suggestion I know but we bought the house on a 100% mortgage for 110 in 2006 and took a 10k loan on top to make the changes we wanted to do.
Also, I may search out a portfolio of houses that have sold in the same area for equal or more than what we are asking. Offer this to the EA to contest the surveyors valuation. I think the EA should be doing this as part of their fee's but I imagine there are more important 'nails to file' and 'tea to drink'.
Another mortgage company and surveyor for them is another potential option.
Otherwise, it's unfortunate that first time buyers may have to be struck off our potential buyers list. The results will always be the same. This is bad news as they are obviously the least hassle with regards to 'chains' and we are are testament that our place is ideal for 1st time buyers. It is/was (in the right price bracket).. this leads me to think that they might encounter a similar response from surveyors to all properties they look at from a similar age. Our house was built in 1922 has some character that newer properties lack, this would suggest that 1st time buyers are always going to have to buy a more newly built property because of any risk factors that could be incurred.

The valuer should not have regard to who is buying the property and it doesn't matter therefore whether the buyers are first time buyers or not. The valuer has to value the property for mortgage purposes according to guidelines provided by their governing body (RICS) and the size of the deposit / type of buyer makes little difference. He values the property at what he considers to be the true value - it is then a question for the lender as to whether they want to lend or not.

Obviously 1st time buyers are likely to have less of a deposit, but ultimately any lender is going to question a valuation that comes back lower than the agreed purchase price. You are right though that 1st time buyers have less wriggle room, but that is a secondary issue if you like to whether your house is worth more than the valuer's opinion (if you see what I mean).

You say it was valued at 127,500 in 2007 which was the peak of the market - there are lots of areas where prices are not yet back to 2007 levels. You bought it 8 years ago for 110k (so 2006?) so what accounted for the increase between 2006 and 2007? It may be that the 2007 valuation (given that it was a re-mortgage) was slightly over optimistic?

As another poster has said, it might be that another valuer would have a different opinion, and if you can find houses that are more or less exactly the same as yours which have sold for more, I think you have valid reasons to challenge the opinion. Otherwise, I think you might have to start negotiating with your buyers (and the vendor of the house you're buying).

"He values the property at what he considers to be the true value" -

True value is an odd thing isn't it - the market value of a property (indeed of anything) is the price that someone is prepared to pay to buy it - in this case £130k.

I agree that true value is objective and one person's opinion may differ for anothers, but for mortgage valuation purposes, the agreed price is what someone is prepared to pay for it, that may be completely different from its value as far as a lender is concerned - hence the issue.

Hi Mandy, I wasn't under the impression that the valuer valued on the basis of who was buying. I can imagine however that a lender would have less to worry about if a buyer had a large deposit to invest. The risk factor is lessened for them. Unfortunately the previous valuation will still remain, it is now up to a lender to risk the remainder (highly unlikely) or if the buyer can afford it outright to pay the asking price.
I can not see the EA wanting to put it back on the market now for the original asking price.
If we had been given the figure of 115k from EA at the start, we would have probably not put it on the market, thus saving a huge amount of money and time invested in trying to move to a property that is slipping from out of our budget.
I am putting together an email to EA with links to sold house under the same area postcode, semi's, 3 beds, none new builds that have gone for either the same or more in past 5 years. They can offer this to the surveyor and crossed fingers they may reevaluate the situation.
I got the info from Zoopla that house prices in our street were up 5.87% on what they were 5 years ago, that takes us back to 09. Did the value fall that much between 07-09? I thought that 08 was at the peak.
We need to also bear in mind that we have spent a lot of money on this house and much improved it over the years.

Re house price drops - it depends where you are. If you go on the Nationwide House Price Index for example, you can input the figures for your area and the quarter you bought the house. Just by way of example, a house worth 127,500 in the North in Q3 of 2007 (you say it was valued in 2007) would be worth 110,330 today.

A house worth 110,000 in Q3 2006 in the North would be worth 102,043 today.

Obviously a valuer looks at comparables rather than indices but it gives you an idea of what the general trend is - obviously if you're in a pocket / area that has bucked the trend, you need to point this out.

It also depends on what you have done in terms of the money you have spent on it - if you haven't added square feet, then you might not have added any value.

Hope it works out for you - its such a stressful time.

Sorry, missed your point about falling prices between 2007 and 2009. Again, just an example but the Halifax house index says a house worth 127,500 in Q3 2007 in the North would have been worth 106,899 in Q3 2009. Its worth having a play with this link

www.lloydsbankinggroup.com/Media/economic-insight/house-price-tools/

Those statistics are not particularly favorable either. i think our EA has teased us down an alley where we are now regretting having not researched our true house value before signing a contract. We did initially have two EA's quote us on the house value, the first said 110, the second 140. We naturally went with 140 thinking that a final 125-130 was more realistic after a survey. It turns out that 115 might have been. There are no extra square feet apart from a log cabin which the valuer didn't even cast a secondary look at. Gulp

My initial point where a buyer is prepared to pay 130 still stands... if they have been searching on the market for a while and have then offered what they consider a fair amount compared to the rest.
it is a shame they were not in the position to offer it outright or at least with a fair deposit. If we hadn't accepted their 1st offer they may have even raised it!!
We will have to realistically consider our options...

I didn't mean to be pessimistic . Thats true re your buyers and if they really like it and think its fair then they might be able to find a way to make up the shortfall.

I have to say I have (as a buyer) had a seller suggest this to me and I refused - I thought it was a typical crappy Foxton's tactic. The house was on the market at 263, we offered 250 which the accepted as long as we paid the legal fees for extending the lease which came to... 13. Foxton's suggested we put it on a credit card and it felt like financial lunacy to take on such expensive debt - so we didn't proceed. I think this will inevitably put off buyers unfortunately.

We didn't pay more than the valuation on a house we bought.
It was on the market for about 20k more than it was valued at. This was in 1992, we paid the valued price.
They were desperate to sell as they were splitting up, so just had to get rid.

Oh well, we shall see... We are happy in the house we are in and shall stay and maybe buy it outright ourselves. We can then save what we were paying on the mortgage and look again in the spring. There are usually more houses on the market then and we might get a better deal on buying a different house. It is a shame that we have had to spend a lot of money to do full circle.

If they get a loan to cover the shortfall, this will effect what they can borrow on a mortgage so is not really an option.

all of these negative response are not necessarily helping. Are there not any positive messages to relay? The title to this was 'How to challenge a surveyors estimate', are there any successful stories to convey?

I'm not sure if you can challenge in the way you suggested an surveyor's estimate. The surveyors' responsibility is to the mortgage lender not you or the buyer's. Surveyor's do take into account what similar properties in the area sell for

Simply either your buyer finds the shortfall themselves or they drop out of the purchase or you drop your price so you can secure your own property. These are the only real options for you all